• Green light for March
  • Twitter storm pushes political risk
  • Brexit bill takes a hit
  • Juppé passes on presidential bid

Investors are pricing in over a 90% chance that the Fed will raise interest rates in their March 14-15 meeting. Fed officials have been clamoring for markets to realize that the Fed is ready to raise rates again, and it is working. The Fed does not like to surprise markets, and with pricing so weighted towards action they would have a hard time not pulling the trigger. Aside from a truly abysmal employment report on Friday, there is little that could derail these expectations at present.

March looks like a go – but even as investors have priced in a 0.25% hike in March the dollar is on the back foot this morning as fresh political tensions surface. Over the weekend, President Trump accused former President Barack Obama of wiretapping his phones during the campaign last year in a series of Tweets. The President has not offered any proof of these claims so far and FBI director James Comey has asked the Justice Department to reject a request for a formal investigation as it intimates that the FBI acted illegally.

The US is not alone in the tide of political scandal, France remains rife with it. Right-wing candidate François Fillon’s campaign has been overshadowed by allegations of paying his family for jobs they never held, and fellow party member Alain Juppé squashed speculation that he would take Fillon’s stead in the presidential run. Juppé confirmed this morning that he will not be a candidate in this election, saying “I am not in a position to unify the party” and threw some disparaging remarks about the state of his party.

Trouble is brewing for UK Prime Minister Theresa May. As her Brexit Bill made its way through the upper house of Parliament last week, the House of Lords decided to tack on an amendment that would allow EU citizens to remain in the country after the government triggers Article 50 which signals a formal withdrawal from the European Union. The lower house in Parliament is expected to overrule the amendment, but kicking it back to their court will delay Theresa May’s timeline exit from the EU.

EURUSD:   Euro slightly weaker as resurgent hopes for the beleaguered Republican party were shot down this morning.

GBPUSD:  Sterling weakness stemming from delays to the Brexit Bill.

AUDUSD:  The Aussie dollar is still kicking around the 0.76 mark, look for the RBA interest rate decision tomorrow.

CADUSD:  Canadian dollar largely flat against the USD as political risks in the US escalate.